Another Mixed U.S. Employment Report

Yesterday's employment report was a mixed bag. More specifically, the household survey was weak while the payroll survey was strong.

The household survey saw a reversal of the gains of the previous months, as employment fell by 330,000. It was only because the participation rate fell that the unemployment rate didn't rise. The employment to population ratio fell tp 58.3%, the second lowest employment rate(Only in December 2009 was it lower, at 58.2%) during the latest decade.

By contrast, the payroll survey showed relative (at least for being this recovery) strength, as not only did it show an increase in private sector employment of 159,000, it also showed an increase in the average work week. Average hourly earnings also gained by 0.2% in nominal terms, but after inflation this number might be negative.

So we have in short a household survey that indicates recession and a payroll survey that indicates growth. Since they are supposed to describe the same thing, they can't both be right. The payroll survey is usually considered more reliable by most economists, including me, when it comes to mothly fluctuations so the truth is probably closer to it than to the household survey. But the household survey indicates that it might exaggerate labor market strength somewhat.